Sony Forms Joint Ventures in China for PlayStation

By Reuters

May 26, 2014

BEIJING — Sony will set up two joint ventures to make and market PlayStation consoles and games in China, the company’s Chinese partner said on Monday.

One venture will be responsible for the PlayStation’s hardware, while the other will be focused on software, Sony’s partner in China, the Shanghai Oriental Pearl Group, said in a filing to the Shanghai Stock Exchange. A conglomerate, Shanghai Oriental Pearl has tourism, property, media and investment arms.

Separately on Monday, Sony’s chief executive, Kazuo Hirai, said in Tokyo that the company hoped to increase sales of the PlayStation 4 console, turning it into a main driver of the company’s fast-growing network and streaming services business, which in turn would spur interest across Sony’s product categories.

Mr. Hirai said its game business was the one area in which Sony would try to sell more products even as it emphasized profitability over sales volume across the rest of its electronics division.

Mainland China is likely to be a difficult market for game consoles, which were banned from 2000 until this past January. Piracy and smuggling of consoles is rife, and the Chinese market for games is very different from traditional console markets like Japan, Europe and the United States, because Chinese gamers predominantly play computer and mobile games.

Chinese game developers and publishers have also adopted a “free to play” model in which games are initially free but can make money by selling in-game upgrades like extra lives and special weapons. Console makers traditionally generate their money from the sale of the console and games alone.

Sony and Shanghai Oriental Pearl are collaborating in response to the suspension of the ban on game consoles within Shanghai’s free trade zone, according to Sony Computer Entertainment, which is the unit responsible for the PlayStation.

One of the ventures will have registered capital of 10 million renminbi, or $1.6 million, and will be 51 percent owned by Shanghai Oriental Pearl Culture Development, a subsidiary of the group, and 49 percent owned by Sony’s China operation, Shanghai Oriental Pearl said in the filing.

The other venture will have registered capital of 43.8 million renminbi and will be 30 percent owned by Shanghai Oriental Pearl Culture Development and 70 percent owned by Sony’s China arm.

Sony’s move comes one month after Microsoft and its joint-venture partner, BesTV New Media, announced they would introduce Microsoft’s Xbox One game console in China in September.

In April, the Shanghai government said console makers would be able to manufacture and sell consoles in mainland China through “foreign-invested enterprises” in the city’s free trade zone, after temporarily lifting the ban on consoles in January.

Mainland China’s ban on game consoles had cited their negative effect on the mental health of its youth.

A version of this article appears in print on , on Page B2 of the New York edition with the headline: Sony Forms Joint Ventures for PlayStation in China. Order Reprints | Today’s Paper | Subscribe